An evolving nursery market

State of the Industry Report - State of the Industry Report: Nursery Industry

Despite a fairly steady nursery market, with close to half of responders reporting increased profits this year compared to 2017, 2018 saw some high-profile closures and bankruptcies. However, two heavy hitters in the market — DCA Outdoor and TreeTown USA — have been acquiring operations across the nation this year.

In June 2018, Gardens Alive! announced that it was seeking a buyer for its wholesale nurseries in Cornelius, Ore., Sims, N.C., Smithville, Tenn., and Grand Haven, Mich. Formerly known as Zelenka Farms, Gardens Alive! grew some 5,000 container shrubs, trees, perennials, roses and groundcovers each year for big-box retailers.

ALSO READ: A modern vision:Colonial Gardens, one of the brands operated by DCA Outdoor, is reinventing the garden center model by combining plant retail, local food and agritourism, with a focus on experience, education and entertainment.

Zelenka Farms was founded in 1993 under the name Berry Family of Nurseries. LM Farms, LLC (dba Gardens Alive!) acquired Zelenka Farms out of Chapter 11 bankruptcy in 2016.

This fall, Rio Verde Holdings, LLC purchased the 300-acre Oregon farm from Gardens Alive!. Rio Verde Holdings, LLC is owned by a green industry investment group, which will run the business as Rio Verde Plantas. DCA Outdoor will manage nursery operations.

Earlier this summer, DCA Outdoor purchased Oregon’s Fishback Nursery, as well as Valley Hill Nurseries, a 350-acre operation based in Kentucky.

Also this summer, TreeTown USA, in coordination with Wells Fargo’s acquisition of Color Spot Holdings, acquired the Hines division of Temecula, Calif.-based Color Spot Nurseries, Inc. for an undisclosed amount. The division has three facilities totaling more than 2,000 acres located in California and Oregon. Color Spot had filed for Chapter 11 bankruptcy in May.

This spring marked the final bare-root season for California-based L.E. Cooke Co. After nearly 75 years, the company ceased its bare root nursery division due to the challenges of producing a large, diverse blend of varieties; selling that product to a declining independent nursery market; and regulatory issues like the state of California’s water use limitations in the wake of the post-recession drought.

Features - State of the Industry Report: Straight Talk

Each year when I’m asked to weigh in on the state of the garden center industry for this special issue, I pause for a moment and consider how to best deliver opinions that are useful. While it’s tempting to want to cheerlead, regardless of realities, that’s not really my style. So, here it is: modernize is the name of the game right now. If you aren’t quickly adapting, you’re going to get left behind. That said, there are good opportunities for the taking if you’re ready to get outside of your comfort zone.

As in any industry, there are always stories of businesses opening — and closing. There always seem to be more stories of garden center closings than openings. But is that such a bad thing? At least, metaphorically. I know, that might sound a bit sacrilegious, given this is Garden Center magazine. The reality is gardening changes. How people garden, who gardens, where they garden, and what they garden with — it always changes. And that’s OK. But most conventional garden centers haven’t kept pace with the evolving retail industry and consumer trends — not to mention customer service expectations. What happened?

Frankly, I feel we’ve left huge gaps in the marketplace, huge gaps that have left existing and potential customers feeling unfulfilled in our relationship. Or, leaving them unaware of our existence altogether. These gaps have also provided outsiders great opportunity. Be it online ordering and fulfillment or creating a more modern updated shopping experience for brick and mortar visitors. Dated branding, dated facilities, dated technology, and dated product selections haven’t helped IGCs.

There are, of course, significant logistical challenges facing us as an industry — namely serious staffing difficulties and labor costs, which are an ongoing struggle for most garden centers.

Based on the State of the Industry survey results in this issue, you can also see that a reduced customer base is a significant concern for many of you. Not as many of you see marketing and advertising as the top challenge, but I’d say the two are intrinsically intertwined. You can’t continually replenish your customer base without solid ongoing marketing efforts. Just as important is the perception you create — with your marketing — of the experience you’re going to offer someone when they visit you in person. Exactly what are you going to deliver once you get them through your doors?

I feel like a broken record, but the last garden center I recently visited was yet again a huge let down for me in terms of my visitor experience and customer service. So much missed opportunity.

Who has moved in to capture this market share, beyond the conventional mass merchants and Amazon? It’s specialty online plant ordering outfits as well as niche boutique plant shops that cater to younger houseplant-obsessed customers in urban locations. They aren’t only taking market share, they’re starting to capture most of the market voice. This new online and brick and mortar plant retailer model has been sprouting right under our noses for the past few years. Modern takes on hardware stores/plant shops are also sprouting up. Old-school hydroponics stores are grabbing for your mainstream gardening market share, and most of them already have sophisticated ordering capabilities. The closet garden is coming out of the closet.

Now, these real challenges aside, there is some low hanging fruit you can grab if you’re fast. If you’re marketing looks dated, updating your logo and other visual marketing tools can quickly put a new shine on your perception of experience. Fix your website, or for heaven’s sake, spend the money to build a new one. Post-recession, the economy has been steadily growing, and people want to buy plants. Most of you have probably seen your houseplant category sales rise significantly over the past year, as results of the State of the Industry also show. Houseplants and indoor gardening trends are big and only getting bigger. Plus, plant quality is looking darn good these days. Growers are pushing hard to deliver beautiful, high-quality plants that you can probably charge more for to boost your margins. These are the easy tasks.

So, what’s new? Plant subscription clubs are IN, and it’s hip to be a plant collector. As I was writing this column, I received the new Mountain Crest Gardens Succulent of the Month Club announcement — $20 a month with free shipping for four assorted succulents or cactus, no repeats, and you can cancel anytime. (Editor’s Note: You can read about The Sill’s membership and monthly subscription programs in Digital Focus.) Boy howdy, I think I’m going to sign up. Forecasted recurring income is the name of the game folks. Where are your monthly plant club subscriptions?

Growers are pushing hard to deliver beautiful, high-quality [houseplants] that you can probably charge more for to boost your margins.

Growing food is still an inspiring force driving many gardeners. The urban farm and prairie are still enticing, but more of them want to do it indoors and in smaller spaces. That takes the right plants, gear, grow lights, and staff who knows what they are talking about. Outdoor gardens are getting smaller as many Boomer homeowners scale down and everyone else urbanizes; but that creates landscape renovation and replanting opportunities. Not to mention, opportunities for more do-it-for-me concierge services.

Amazon and Uber have trained us all to expect goods and services on demand and delivered. What are you doing as a retail garden center to give customers gardening on demand? Ultimately you must spend some quality time analyzing your specific market, find the holes and how to fill them, and determine what people really want from you as a garden center. How you do that will certainly look different based on your location and specific market demographics. Market differences and geography aside, customer expectations are modernizing across the board.

A garden center that is successful and profitable in 2019 and beyond might look a whole lot different than traditional IGCs today in terms of their physical size and appearance, what they sell, and how and where they sell it. Customers might not even call them garden centers anymore. That’s OK. My advice to anyone wanting to start a garden center or revitalize an existing one? Don’t be afraid to shake off the old model. Ultimately, you need to be who your customer needs you to be.

Leslie (CPH) owns Halleck Horticultural, LLC, through which she provides horticultural consulting, business and marketing strategy, product development and branding, and content creation for green industry companies. lesliehalleck.com

It’s hard to believe that the holiday season has again descended upon us. In many workplaces, November and December are months set aside to celebrate the year’s milestones and accomplishments, and to recognize and thank employees for their contributions. Unfortunately, in some workplaces, along with the holiday cheer comes an increase in legal liabilities associated with alcohol use, harassment claims and injuries. How can you steer clear of these holiday headaches? Read on for some practical tips to minimize risk and still have fun.

From fun to fateful

When it comes to parties, the choices are unlimited. Some businesses celebrate with elaborate gatherings in beautiful restaurants and invite employees’ friends and family members. Others have low-key employee luncheons, picnics, or get-togethers at the boss’ home. Regardless of the type of celebration or the location, parties have been known to boost morale, build team spirit and help create more of a family feeling at work.

Oftentimes alcohol is served at company parties. When it is, employers often rely on employees to exercise good judgment when drinking. However, we all know that good judgment and alcohol don’t always go hand-in-hand. For some employees, a mixture of festive activities and alcohol could obscure the boundaries of acceptable work-related behavior. Many workers believe the general rules of appropriate conduct don’t apply at office parties with alcohol.

Consider this — an employee has several drinks at the party, leaves, and causes an automobile accident in which injuries occur. Even if the employee isn’t driving a company vehicle, could you (the employer) be held liable? Or what about the manager who gets a little tipsy at the party and begins to flirt, touch or proposition an employee? Can an employer be held liable for sexual harassment that occurred at a voluntary event held off company property and outside normal business hours? These scenarios represent real risks and potential liabilities that should be considered, especially at holiday time.

Not surprisingly, the federal Equal Employment Opportunity Commission (EEOC) has identified “workplace cultures that tolerate or encourage alcohol consumption” and “workforces with many younger workers” as two out of a dozen work environment risk factors that increase the likelihood of harassment. According to the EEOC, “the presence of one or more risk factors suggests that there may be fertile ground for harassment to occur.”

It’s an unfortunate reality — but office parties can become liabilities for employers.

Minimizing the risk

So how can you limit holiday party liability and still have fun? For starters, consider eliminating alcohol altogether. I know this isn’t a popular option, but it goes without saying that if you eliminate the alcohol, you eliminate the root cause of most holiday party liabilities.

If you elect to serve alcohol, here are a few suggestions to help reduce risk:

Don’t make alcohol the focal point of the celebration. Define a work-related purpose for the celebration and plan the event to include stories about employees, highlights from the past year, a motivational talk about the upcoming year, or other business-related topics.

Designate one or more managers to monitor employees. Designated managers should not drink at the event and should keep a watchful eye on employees who do. This includes, but is not limited to, making sure that employees don’t drink in excess, become overly friendly with coworkers or others, engage in behavior that is dangerous to themselves or others, or drive after consuming alcohol in excess. Designated managers should have good judgment and should be educated about the signs of intoxication. They should also be willing and able to address improper conduct.

Select an appropriate venue. If you elect to have your party at the local pub or a nightspot with a questionable reputation, you could be asking for trouble.

Limit the number of drinks per person and/or the time when alcohol is served. Consider using a ticket system to limit the number of drinks.

Eliminate liquor and/or stop liquor or alcohol service before dinner. Serving only beer and wine and/or stopping liquor or alcohol service before dinner can help minimize the potential for problems.

Use a professional bartender. Let the bartender know that the company expects him or her to deny service to any employee who is visibly intoxicated. Arrange for the manager in charge to be notified if an attendee appears intoxicated.

Make sure that food is served. Opt for food that is filling and that stays in the stomach longer to assist with alcohol absorption.

Arrange to have transportation available. Hopefully, by taking the above measures, this won’t be necessary, but having the option available is wise.

To limit other liabilities, consider these suggestions:

Before the party, inform employees that the company’s sexual harassment policy remains in full force at all work-sponsored events. Remind them about their duty to report incidents of harassment they experience or witness.

Ensure your managers understand that they set the tone for appropriate behavior even when participating in company-sponsored functions outside normal work hours.

Promote family-oriented celebrations scheduled during the afternoon or invite spouses and significant others to evening parties to limit the potential for misbehavior.

Do not require attendance at the party; make sure employees know that it is voluntary. If it’s mandatory, you may be liable for workers’ compensation should an employee get injured at the event.

Thoroughly investigate all harassment claims brought by employees after parties. Take prompt and immediate action against any employees who violate harassment policies at office events.

With a little bit of forethought, planning, and wise decision-making, you can eliminate many of the risks and potentially devastating liabilities associated with holiday parties. If you’re the boss, I urge you to stop and think twice about this one. It is, after all, the time of year for joy, not grief. Cheers!

Jean is president of Seawright & Associates, a management consulting firm located in Winter Park, Florida. Since 1987, she has provided human resource management and compliance advice* to employers across the country. She also consults with employer-members of trade associations, including, among others, The Garden Center Group. She can be contacted at 407-645-2433 or jseawright@seawright.com. (*The information in this article is not legal advice. For legal advice, readers should consult with an attorney.)

Data from our State of the Industry surveys reveal just how much garden center marketing has changed in the past five years. In 2013, 68% of retailers reported they were using social media platforms. That number has steadily increased over the years, and this year, 90% of IGCs are using social media outlets like Facebook, Instagram or others to connect with potential customers online, with nearly all of those who are on social media – 97% — using Facebook. More than half of respondents are on Instagram, as well, which is becoming an important space for retailers to share their stories, and products, digitally. About a quarter use Twitter, Pinterest and YouTube. In 2013, 63% of IGCs were purchasing advertising in newspapers; that number has dropped by nearly 20%. More retailers are hosting classes and events than in our past surveys, and use of direct mail, radio and TV ads, and billboard or road signs has remained steady.

In February, Dale Bachman, CEO of Bachman’s, based in Minneapolis, Minn., announced he was retiring Oct. 20, 2018, after a 46-year career working at the company his great grandparents founded 133 years ago. Bachman, a fourth-generation owner, will still resume his responsibilities as chairman of the board for the company, which operates retail locations in the Twin Cities, including six full-service floral, home, and garden centers, a floral and gift store in downtown Minneapolis, and 27 floral departments within Lunds and Byerlys grocery stores.

Bachman has been CEO and chairman of the board since 2008 and entered that position during trying times for both the company and the economy, with the sudden loss of Todd Bachman, who was chairman of the board and CEO. At the same time, the Great Recession was beginning to dismantle the economy, and it took years for the country and the garden center to recover.

Bachman discussed his career and his post-retirement plans with us during an interview.

Editor's Note: A shorter, edited version was published in the print edition. Read the full version below.

Garden Center: I know that you grew up in the business and graduated from the University of Minnesota, majoring in plant and soil science, but was there ever a moment you thought of doing something other than work in the family business?

Dale Bachman: I think I always knew that I wanted to work in the family business.

I’ve been thinking about those important points in time in somebody’s life, and for me it was really the importance of role models and mentors. I had great role models in my grandfather, Albert [Bachman, second-generation owner], and my dad, Larry [Bachman, third-generation owner] and my mom, Louise. My dad had asthma and allergies such that he couldn’t work in the greenhouse and needed to be outside. So, my grandfather started the nursery business during the war so that would be there for my dad after his return from service in the Air Force in WWII. Seeing the preparation my grandfather had done to have a landscape business ready for my dad when he came back from the war [was an inspiration].

GC: Who were your mentors?

DB: When I decided that I was going to go to the University of Minnesota, I was able to follow two [older] cousins; my cousin Todd [Bachman, who also served as CEO and chairman of the board of Bachman’s] and my cousin Craig [Bachman]. I had two good connections at the Department of Horticulture, but really it was Todd who was a mentor. We grew up next door to each other. When it was time for me to go to the University of Minnesota and study horticulture, Todd made the introductions on the academic side and as a member of Delta Theta Sigma, which is a social/professional agricultural fraternity. I pledged winter quarter of my first year, and that was all because of Todd’s mentoring and guidance. And then it just continued here at Bachman’s. I guess for all those reasons, I always knew where I was headed.

GC: News about your retirement indicates you’ve worked at and led Bachman’s for nearly five decades, but I was thinking about how if you count time spent there as a child, as you mentioned, helping to empty waste baskets when you were 10 years old or spending summers working at the growing range, it really has been part of your everyday life for all of your life. How will your day-to-day change in retirement, and, other than maintaining the chairman of the board position, how do you plan to stay connected with the company?

DB: My day-to-day is yet to be determined, and I’ll figure that out. My intention would be to attend our peer group meetings and also Cultivate to stay connected and learn. I will be tracking the company’s progress as our board meetings take place and continue as chairman of the board. I still have strong connections to the University of Minnesota, and I would hope to take advantage of taking some classes at the university, too. And I intend to spend more time in the garden.

GC: What are you most looking forward to in your retirement?

DB: One is to work on Dale instead of working on Bachman’s. The idea of expanding and growing and trying to become better every day. I look forward to being less judgmental. It seems like in business we’re making judgments every day, and I would like to take a break from that and be more present in the moment.

I was in church on Sunday [October 7], and the church has favored Bachman’s with some very nice landscaping opportunities, and just looking out at that garden yesterday and seeing the fabulous mums in color and hydrangea just blooming about as much as hydrangea can bloom. You just look at the landscape and the difference that it makes. This area had to be redone in significant ways for a variety of reasons. And you see the finished product, and it's a tremendous satisfaction that comes from looking at a completed project.

It’s no different than when I was growing up and working alongside my dad. He said one of the greatest benefits to this hard work is the satisfaction you get from a job well done. It's still true today. I think that’s the advantage of winding down now, is you start to reflect on those opportunities. Now there’s an opportunity to take a breath.

Industry accolades

“Dale has this way of making you feel like you can do anything you want, and you are great at what you do. You can just tell he genuinely believes in people. He always makes time for people, and I think that’s why he’s been so successful and his company has been so successful.” – Dean Engelmann, co-principal and co-founder of Tangletown Gardens

“Dale’s been such a great advocate to the consumer for how great plants are. He’s always had a great vision of what makes people happy. To see the things that he’s accomplished, that Bachman’s has accomplished, it just makes you want to do better as well.” – Terri McEnaney, president, Bailey Nurseries

GC: What will you miss most?

DB: I’m not planning to miss too much because I really do intend to stay connected, both with the people and the plants, so I don’t think I’m going to suffer from too much withdrawal. The good news is it will be a different relationship but hopefully one of more support and encouragement than anything else. But I do look forward to staying connected and visiting the stores and our production operations but visiting for different reasons.

GC: Reflecting back on your time at Bachman’s, what are you most proud of?

DB: It isn’t something that would be reflective on my work but the fact that we are in our 133rd year, I think we can all be thankful for that. That our guests, our customers, our team, the family has allowed us to be here for 133 years. You look at what Bachman’s has survived over the years, whether it was WWI or the depression or WWII and all the conflicts in between.

During the Great Recession, Stan Bachman (a third-generation family member) was still alive in those years. To talk to Stan about the issues around the Great Recession when we were living through it, and to hear people like a Stan Bachman, or even Gordie Bailey (of Bailey Nurseries, also third-generation family member, based in St. Paul, Minn.,) say this period of the Great Recession was probably in their estimation different than any other economic downturn than we have experienced in terms of its severity and duration, was helpful. The recognition that this Great Recession that we went through, both the magnitude of the downturn and the duration and the complexity of managing through something like that today, was significant. There are so many more moving parts today than there were, as Stan recalled, for what it took for his father’s generation to live through the Great Depression. Bachman’s was much smaller at the time. We were able to take care of the company and the family in the depression years.

GC: How did you get through it?

DB: It took a tremendous amount, including sacrifice from the team. Those were difficult, difficult times, but with the whole team involved in the process, we made it through and began to grow again. We're really tremendously thankful that we came out on the other side. Business is fragile, especially for our segments — landscape, garden center, production — nothing is a given these days. There are probably easier ways to make a living than in our industry, but we go into it for lots of good reasons. And it’s still one of the finest occupations and industries that you’re going to find in the country.

GC: November is our annual State of the Industry issue. What must garden centers do to remain relevant and successful?

DB: The aspect of garden centers being community centers is what is exciting about retail today. During a session at Cultivate’18 about garden centers being community centers, Lindsay Squires Chrisp of Tagawa Gardens in Colorado shared ideas and experiences, similar to what we see in our marketplace. Event marketing is a big part of what we do at Bachman’s and a critical part of the shopping experience today. The Ideas House was spearheaded by Paul Bachman (who retired as president in 2016) and the marketing, visual merchandising and buying teams in 2010 as part of Bachman’s 125thyear celebration. The Ideas House product mix and merchandising changes with the season, with a spring, fall and holiday house on the property of the Lyndale store, and it has become a tradition for our guests.

We started customer appreciation events at all of our stores this fall, with each having its own mix of events. At our Lyndale store, we offered yoga in the garden, food trucks, and green plant seminars led by the Minnesota State Horticulture Society. I did yoga for the first time, and it was really fun. The next time, I’ll try to breathe; I was so focused on getting the positions right, but it really was a great experience. We’ve got our fall inspiration night and our holiday inspiration night coming up. We’ve started a tradition of indoor farmers markets in the wintertime, and now that’s been expanded to five stores.

GC: You also have organized flower shows for a number of years.

DB: We had such a long tradition with our flower shows in downtown Minneapolis. With the closing of the downtown Minneapolis Macy’s in 2017, we didn’t think there was a future for the flower show. We thought that was the finish line. Then, we received this marvelous invitation to do a flower show at The Galleria this past spring. It was called the Floral Experience: Spring is in the Air. The galleria realizes that shopping has to be more than just shopping. It’s the Galleria shopping experience and other special events they offer that make the difference.

They just asked us to do three more years, from 2019-2021. They ended up with daily guest counts nearing the number of guests they get at the Galleria during the holiday season, so that made a big difference for the stores and the restaurants. It is all about the experience. The flower show continues to live as a gift to the community, and we’re very fortunate to be a part of bringing it to life.

C: What is one of your fondest memories of working in the business?

DB: It’s all the people who have been part of the Bachman’s story. It’s not just our team, but the guests we’ve been able to work with over the years. We’ve always tried to make it easy for our guests to provide feedback. You just hate to fail, and if we had failed, we wanted to know about it. I would save customer complaints and try to learn from them and not repeat them. I was kind of feeling like we couldn’t do anything right, because you tend to take these problems to heart. So, I started to save the thank yous and drop those in a file. Over the years I ended up with boxes of compliments, and [we compiled them into books.] To reflect back and look at some of the good that we’ve done through those years, I think it means a lot. I will miss the people that have been part of Bachman’s story that I’ve gotten to know through the years.

GC: What do you wish you would have done differently?

DB: When I talk about staying connected, I think my cousin Todd had an ability to focus on the operations and learn about our team members at the same time. Just one example, I saw one of our floral merchandisers leaving at the end of the day during the lead-up to Mother’s Day. I wished her a good evening as she was heading to her car, and she perked up and said she was going home to see her son, a service member who had come home and surprised her that morning. In talking with her, it wasn’t just that one adult child that she had in the service. She has three active duty service members, a daughter and two sons, and I didn’t know that. I think Todd would have known that, and that’s what I’d like to do, is to spend some more time listening to their stories.

GC: What advice would you share with Susan Bachman West, your cousin, who has been president of Bachman’s since 2016?

DB: Learn from role models and seek advice and counsel from mentors. She has tremendous role models in her father and her mother. That’s going to serve her well, and I know that she has the support of the family, no question about that. I’ll just try to support Susie and the 5th generation family members, Karen Bachman Thull, director of marketing and communications, and Adam Bachman, fleet logistics and operations manager, and the company, as best I can.